A Company Declares a Five-For-Three Split to Rationalise Its Share

question 7

Multiple Choice

A company declares a five-for-three split to rationalise its share structure.If the company currently has 1 750 000 shares of stock outstanding,there will be ____ shares outstanding after the split.

• A)1 350 000
• B)1 602 000
• C)2 500 000
• D)1 050 000
• E)2 916 667

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Definitions:

Excess Capacity

The situation in which a business can produce more goods or services than currently demanded, often leading to inefficiencies.

Product Life Cycle

The progression of a product through stages of introduction, growth, maturity, and decline in the market.

Commoditization

The process by which unique products become indistinguishable from one another in the eyes of the market, often leading to competition based primarily on price.